Electus pivots into Governance
The original plan was to be an election platform aiming to decentralize voting with ideas like liquid voting etc. However, I have been talking to people in the election space in May, since we were close to an MVP completion. The conclusion was that no government is ready to digitize elections yet. The main reason is that governments do not believe that the problem of coercion can be solved with technology. Presented with this roadblock, one had to think outside the box. The recent model we had come up with, for the purpose of small scale transparent elections, involved the distribution of non-transferable tokens. It gradually dawned upon me that (non transferable+revokable) as a combination of properties for a token could be used for more than just elections. It could be used for governance itself, and who is more in need of governance than our very own crypto space?
The first idea that came to me is the creation of a do-it-yourself on-chain community toolkit. Imagine a large community with a number of admins, who perform gate-keeping of the community. They would take care of adding and removing members-all transparent, while members would gather to create consensus-again transparent, and also immutable. It could be a community of developers, or investors, or simply supporters. Binance is famous for its community polls, yet the polls are plagued with fake accounts and unfair results.
Another reading that I had come across in February was the DAICO. I only recently started thinking about it seriously, and it now seems like the market is indeed ready for a revolution in investment governance. Vitalik has dropped one bomb of an idea. This could change how ICOs work altogether. The interesting thing is that a few aspects of this particular idea can be improved by including a permissioned on-chain membership. These 2 ideas kept swirling in my head for a long time, before I realized that the non-transferable + revocable combination on the token could make it a ‘membership token’ in general. This later on got internalized in my mind as a more general version of Electus as we were planning it. Now, Electus voting platform would become the Electus protocol.
How does the Protocol work?
I will just let the following images illustrate the functionality of the protocol.
What can we do with this?
Governance is a really wide area. It encapsulates all kinds of applications that depend on creation of consensus, and I intend to illustrate in this post, the kind of applications that are possible, using the Electus Protocol as a backbone.
ID and Passport Issuance:
A lot of blockchain projects are now offering ID verification services. But so far, very few have attempted to issue passports to people using the blockchain. A non transferable and revocable token issued by the immigration bureau of a country can easily serve as something akin to a passport, which can be used for immigration at airports across the world. Also, the immigration bureau may have different smart contracts for non transferable and revocable tokens which are issued to foreign nationals as travel visas, business visas, and so on. Not only can a passport be used for immigration, but it also serves as the ultimate ID proof. Also, passports issued in such a fashion cannot be lost or destroyed, or forged.
Equity board of governance:
While the DAICO model suggested by Vitalik Buterin has made rounds on the internet, it is not necessarily the best way to govern a for-profit business. It is more suited towards open projects for public benefit, which also rewards token holders. As we know it today, the ICO environment is unknowingly catering to 2 kind of projects.
A. Public Projects: project intending to become a public service, funded by public with incentive structure and utility built into the tokens — (eth, wan, lisk, 0x, electus)
B. Business Propositions: projects which are actually businesses with profit goals and intended ROI, provide dividend etc. (NEXO, Modum etc) however they raise money through ICO due to certain priorities.
Here is an example of a different governance model which involves dividends, investor cash flows, and board of directors electing a CEO. This is a system which would require a certain level of accountability for participation in governance. The Electus protocol can be designed to allow for entry to the board based on certain eligibility criteria and accountability.
Anti-piracy for console games:
A lot of gaming consoles have online game shops where game downloads are subject to the availability of a ‘ticket’(which is purchased), and hackers have built alternate shops where a ticket can be alternatively sourced(the double spend problem isn’t solved) in order to download paid games for free. This can be prevented by making each device possess a blockchain address, and sending over ‘membership tokens’ to an address upon purchase. These tokens are revocable, and hence prevent misbehavior on the part of devices, and are non transferable — meaning false tokens cannot be obtained — for transferring the game to a different device, the gamer can request a transfer which the gaming company can process easily as the admin of the governance contract. Not only can games be purchased but also rented, through micro-payments.
Corporate structures:
Entire companies can be built on to the electus protocol, the ‘membership token’ becomes an employee token, and entire structures like Executive group comprising of CEO/CTO/Board of directors can be built, to which ‘managers’ and ‘employees’ report. All members have an employee tokens, but:
a. Executive collectively assigns a delegation=[(i) agenda (ii) budget], to a manager who can choose to approve or negotiate the budget.
b. Once a delegation has been assigned(delegation is a SC{smart contract} with some funds in it), the managers salary is sent to the address with managers employee token from the delegation SC, and the remaining amount is assigned by the manager to sub-managers in the form of sub-delegations(sub agenda with sub budget) — the sub manager iterates the same thing to his subordinates, or the manager can assign a task to employees(non manager) who instead of recieving their own delegation contracts will recieve only a salary stream from the original delegation address.
c. Employees will recieve salaries into address with the employee token(this token is transferable upon request)
The following parallels can be contractually baked into the structure:
a. Firing of employees=revoke token
b. Notice period=payday continues after revoke
c. Probation=no notice period
Company consensus can be taken by voting with the help of employee tokens to manage electorates. Incidentally, in this case, the voting usage of the protocol is optional and minimal.
The structure described above ensures that employees work cannot go unnoticed by senior management. They will know how much value for money each employee is, how much middle management is making. Employees also can be sure that the distribution of workload is known to senior management. They need not feel like they are unnoticed.
EVM Recounting:
Governments across the world use EVMs for voting. There is a verifiability problem with respect to this. During the elections, it is not possible to know if the machine is tampered. Some failed solutions like VVPAT maintain paper trail — the machine gives you a chit saying that you voted for xxx and then you give this chit to an officer who stores it in a box. This is the most widely adopted solution, not because it is effective but because governments want paper trail — paper trail is ‘immutable’ in the governments perspective. However paper trails are useless because its not possible to know whether the paper trails match the actual counted vote without physically counting the paper trails. Even if you physically count the paper trails, you would have to be sure that:
a. Nobody tampered with the paper trails during transportation.
b. The person who is counting is honest. The only way to do this is to get it counted by multiple people.
A simple solution is to let the EVM upload each vote to the blockchain as a transaction, and have these EVMs registered with the governments membership smart contract. The membership smart contract is made public, and anyone with a working internet can audit the results on their own manually. I feel like there is a start up called Agora already working on this, but they don’t use the Electus protocol. Instead, they have built their framework solely for this purpose. Time will tell whether that’s a viable idea, but if there is potential in this space, Electus will not be far away from building the requisite technology.
Other than the use cases mentioned above, 2 interesting projects that we will cover immediately after the release of our protocol are a DAICO platform, Vault, and a direct democracy platform, Polis.
The protocol itself creates ‘entities’(smart contract) which give out ‘memberships’(token) to individuals after some form of verification(permissioned system), and then the smart contract takes over the governance procedure with the members as independent participants in governance. This offers flexibility in the kind of governance structure one can create. Since the protocol will form the bedrock of several governance structures in the future, there will have to be some form of governance for the protocol itself. Hence we will be creating a network of organizations, onchain. This will be an apex entity, whose members are entities that wish to govern the protocol. Consensus will be weighted by the staking of Electus tokens. This network will also help grow the ecosystem of the Electus protocol, and will be called the Electus Network. There will be sub-staking, where an entity gets consensus weight in the Electus network if a member of this entity agrees to stake Electus tokens and delegate it up to the entity. The entity may then offer internal governance privileges to this member in order to incentivize such delegation.
For instance one member of this network will be Vault. It will garner sub staking by allowing customers free services in exchange for certain quanta of staking. Polis will not be a member of the Electus network, because it is not an entity on its own. However, organizations creating their entity on Polis can apply to become a member of the network. It will not bemandatory for an entity to join the Electus Network in order to function as an entity. However it is a necessary step to take part in governance of the protocol.
